Three Tips for Buying a Business

You want to change career paths or take on a new level of responsibility, so you decide you are going to buy a business. It should not be an easy decision since there is an immense amount of work that goes into the process. It is hard to narrow down tips for buying a business since there is much that goes into an agreement. These three tips are some of the essentials when you consider buying a business.

 

Research

Buying a business is a tremendous endeavor. Not only is the purchase of the business itself a huge commitment but so is the process beforehand. You do not want to make this decision without doing your due diligence. Take the time to figure out what you are interested in, determine if the business model has the chance of being successful, determine any risks, discuss why the business is for sale, and make sure it aligns with your budgets. There is a lot of research to be done to make sure that purchasing a business is the right move to make.

 

Buy Assets

It sounds strange to say buy the assets and not the business. You will receive a better tax treatment since your taxes will be based on what you paid for them and not what the seller paid for. Another advantage is you do not assume any liabilities of the previous owner. There will, however, be liabilities included in the acquisition agreement. These liabilities include product liability, environmental liability, liability under bulk sales, and employee benefits. Every contractual agreement is different and should be negotiated with the help of counsel.

 

Hire a Professional

Hiring a business lawyer and an accountant will help you with the numbers and the paperwork. Accounts help to determine the assets, liabilities, and what possible earnings could be. A lawyer will help draft, proofread, and negotiate contracts during the purchase of a business. Having successful professionals can make purchasing a business a smoother process. Creating a successful beginning may create an easier life of your business. You will have a clearer picture before closing the deal.

 

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.

 

What is Succession?

Succession isn’t just the creating and signing of a will. Succession law redistributes the property of a deceased estate upon the death of its owner to the beneficiaries entitled, either in the will or by the law. Succession is concerned with the deceased person’s property whether there was a will or not. Lawyers who are involved in estate planning will guide their clients through the estate planning process. Lawyers will discuss the details of your succession plan before drafting the will. This creates an easier process of drafting the will and getting it right the first time.

 

Every situation is different. Some people have homes, cars, businesses, or other assets that some may not have. Along with all the assets are different whether it large or small business or a used or brand new car. Some people may want to exclude family members from their estate while others may want all family members to have an equal share.

 

In terms of succession in businesses, succession planning is in the case of the owner or key member of management ends up leaving the company, is terminated, retires, or dies. This ensures that the business does not have to stop its day to day activities. It will outline the change in leadership that may occur provided that the before mention were to happen. Creating a succession plan could benefit the company by retaining key employees, reducing the tax burned, and maintaining the value of its stocks and assets during the transition of ownership. This also provides the owner with a sense of comfort since leaving won’t burden the company.

 

Although there are many benefits to having a succession plan in place, many do not. An owner may not develop one because they do not want to choose a successor, they don’t have many interests beyond the company, or they do not want to confront their mortality. Succession planning entails details that compares to planning one’s own death which may cause a discomfort.

 

Succession can take many years to plan and the implementation can take longer. Taking the time to create this plan will assure them a way out of the company with enough assets for retirement. The business owner could sell the company to an outsider, family members, retain the ownership and hire new management, or sell to the employees. Owners need to initiate the idea of a succession plan, select details that will be included, educating the successor, and the final transition of the plan.

 

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.

 

Why Do Franchises Fail

Before you decide to either join and start a franchise, know the chance of failure is present. Just like any other business, if the right steps are not taken, the concept could fail. Testing and doing your due diligence during the early phases could protect you from the number of factors that lead to failure.

 

The Business Model

The concept of the business has to be approved by the consumers. If the idea is not received well by the consumers, the franchise will then fail. Also if your business model is complicated and not easily replicated, your company will struggle. The operations have to be taught at a standard for any businessperson that wishes to replicate it. Also if your business model is too similar to others already established, the business model is not successful, it is not likely to be a successful franchise.

 

Location

Like many responses to real estate and business, the most important thing is location. You could have a great business model and a service or product that all consumers will want but they can’t find you. You are in an area where their not looking for your product or service. Since there is no opportunity in the location, the franchise will not flourish and the possibility of being successful deteriorates.

 

Marketing

This goes hand and hand with the location, as you could have the best product or service but no one knows about it. If your franchise doesn’t have an established reputation, your consumers will not know to give your business a chance. You have to be knowledgeable about where to spend your advertising efforts. Advertise on a more localized level and niche to reach the right consumer that will bring your company profits. If you do not establish a marketing or advertising plan, your company may fail without anyone knowing it existed.

 

Competition

A major reason franchises fail is competition. With around 79,000 franchises in Australia, it is hard to find an idea that is popular but not tapped out. There are certain sectors of franchising that are rising due to the growth in healthier lifestyles. Following along in what is already successful could lead to your downfall.

 

Expectations

You need to set realistic expectations for yourself and the business. It can take years to see profits and if you are not prepared your franchise could crumble around you. The hard work and effort put into being successful may be a deterring factor when deciding to start a franchise. If the expectations are unrealistic it can lead to failure.

 

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.

 

What to Look For When Hiring a Lawyer

A lawyer is your advocate who should fight on your behalf in a legal situation. They should use reasonable, ethical, and cost-effective means to get you the best possible outcome. You can search online for law firms and private offices or you could take recommendations and read reviews. If you are looking for a lawyer for a legal issue, think of these qualities when researching and meeting with your soon-to-be counselor.

Comfort
If you are not comfortable with your lawyer, you may not feel confident they can do the job. You want to be able to feel comfortable with your lawyer and have an open relationship. This will allow both of you to share relevant information pertaining to your matter. A lawyer won’t be able to fully assist with your matter without knowing all of the information.

Fees
Look for or ask for their rates when hiring a lawyer. You want your lawyer’s fees to be worth taking the case to trial. If it’s a small dispute it, it won’t require expensive representation. Expensive fees do not mean that the representation will necessarily be any better nor does it guarantee you will win your case. Legal fees should be considered on a cost-benefit analysis. Mid-range priced lawyers generally offer the best value and you will be getting solid experience with a firm that has strong capability without paying the corporate price.

Their Track Record
Search your possible counsel’s name on the Internet before you meet with them. Check the firm’s Google reviews. Also, ask the lawyer about his or her experience and that of the team. You are entitled to know whether they can do the job. This is because not all lawyers are good lawyers.

Communication
You want to know your lawyer will be with you every step of the way during the trial process. Even if you have a random question or concern in the middle of the night and need counsel, you want a lawyer who will respond swiftly. After your initial meeting, save some questions and send over an email with your concerns. If it takes them days to respond, they may be too busy to be handling your case.

Negotiation
Ensure that your lawyer is a good negotiator. Many are very combative when they should conciliatory where appropriate. A lawyer’s goal is to get the job done, having regard to the client’s goals.

When choosing a lawyer, you want to find the best fit for you. You need someone who is competent and aware of your needs, not only your cases needs. Find someone who you are comfortable with and successful to help with making a difficult time in your life a little bit easier.

 

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.

Commercial Leasing: Landlord Edition

A landlord of commercial property has the job of drafting the commercial lease. The lease agreement is a complex document that sets out the rights and obligations of the parties. When drafting a lease, the landlord’s lawyer will have regard to the particularities of the property and the tenant’s particular type of business. The use of the premises will impact what the terms of the lease will be. The lease will be comprised of both the general conditions of the lease and the special conditions. Some of these provisions will be essential terms with strong consequences if breached and tenants should have regard to these terms.   

Description

The premises are described by the property address and the volume and folio number of property identifier. The size of the premises is also often mentioned and defined in square meters. This is usually included in the Disclosure Statement.  A plan of the premises can also be annexed to the lease, which will clearly identify the perimeter of the premises. This gives the tenant a clear understanding of the property being leased and avoids arguments later if there is an issue.

 

Use

The permitted use of the premises will be defined in the lease schedule. Typical uses are retail, industrial or office. There can, of course, be more specific uses of the premises specified, such as warehouse, hairdressing salon or vehicle servicing, as just three of many examples. It is generally advantageous to the tenant to be less specific about the use of the premises, so as to make it easier to assign the lease should the business not work out or need to be moved to alternate premises. This is because a landlord is often not compelled (depending upon the terms of the lease) to assign the lease to a party wanting to use the space for a use not stated in the lease.

 

Base Rent

Base rent is usually calculated as a set price based off of the square meterage of the premises. It is a fixed amount.

 

Turnover Rent

Turnover rent is an amount of further rent payable, based on a percentage of sales, often over a predefined amount of turnover, This is common shopping center leases. For instance

 

Outgoings of the Premises:

The lease may be inclusive of building outgoings; typically, though, outgoings are paid over an above the Base Rent and, where applicable turnover rent. Outgoings can include: Landlord ownership and maintenance:

  • Electricity, Water, Sewer charges
  • Council Rates
  • Property insurance
  • Land Tax (but not in relation to retail leases in Australia)
  • Cost for building personnel, such as security and cleaning

 

Security Deposit

The Security Deposit is the bond of yesteryear. In fact, they are interchangeable terms. The security deposit is paid the landlord prior to handover of the premises to the tenant. Landlords will call upon the security deposit when there is a breach of the lease with a financial consequence and, after demand, the tenant has not made the payment. The tenant will then have to replenish the portion of the security deposit so applied.

 

Repairs and Alterations

Tenants will be responsible for any damage done to the property but will not be at liberty to alter the structure of the building without the landlord’s prior permission. If repairs need to change the structure, landlords will oversee it and the tenant will be the one charged for such works. Landlords maintain the control over alterations by requiring tenants to ask permission before making any changes to the property.

 

Insurance

Tenants are required to take out appropriate insurance. Insurance coverage will include:

  • building insurance
  • public liability insurance
  • landlord insurance
  • business interruption insurance

Non-payment of Rent

In the case of non-payment of rent, a landlord may terminate the lease without notice.   This can be by way of termination by written notice or lockout of the premises.

Subleasing

Landlords must consent to any subleasing agreement a tenant desires to enter into. The landlord may be asked for substantial references that demonstrate that the tenant is respectable, responsible and solvent as a general rule. Sometimes the landlord can increase the amount of the security deposit. Landlords cannot deny tenants subletting unless there are solid and “reasonable” grounds for denying the new tenant.

Surender of the premises

When the lease term comes to an end, tenants must surrender the premises. Tenants will surrender the premises in the original form the property was handed to them unless the landlord agrees otherwise. This is known as make good.

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.

 

Insight into Business Law

Business law, also referred to as commercial and mercantile law, involves the start-up and running of a business. Business law solicitors assist businesses with filing, obtaining, and producing legal content that will allow the business to either start or continue working. Legal Career Path states that there are two distinct areas in business law; “regulation of commercial entities through laws of partnership, company, bankruptcy, and agency and the second is regulation of the commercial transactions through the laws of contract.”

Businesses are considered individual legal entities. Business law solicitors need to make sure they are filing and obtaining correct paperwork so the government will view the company as an existing entity. A business law solicitor works as an advisor to the company to ensure the business chooses the entity that is in their best interest. Another consideration for a new business, it needs employees. solicitors will help determine the proper protocols for hiring and firing employees. Other protocols include dispute resolution, payroll, taxes, and benefits. Business law solicitors will teach the business the rules and regulations of managing their employees.

If the business’s primary action is to sell consumer goods, there are more rules and regulations to follow. The Australian Consumer Law lays out the rules for sales, bulk sales, frauds, contracts, credit, and transaction security. An solicitor will go through this Code and highlight what rules the business will have to follow. Other legal responsibilities solicitors can assist a business with include, drafting and negotiating contracts, intellectual property, antitrust, and bankruptcy.

Drafting and negotiating contracts can be a part of a business’s everyday workflow. Whether it is drafting a lease agreement or creating a contract with a third-party vendor, most companies do not know how to draft these documents. They will either use their legal counsel or hire a business law solicitor from a firm. With start-up companies, it will be easy to run into an intellectual property conflict. When creating a new product or idea, the company needs to ensure that they are the ones that have control over the rights of the new product or idea. An solicitor will have to be well practiced to get involved with the IP Australian Government. Most businesses want to grow, business law solicitors make sure the company is conducting itself according to competition law. All companies fear one day they will have to file for bankruptcy. There are different ways to file for bankruptcy, which have different requirements and business solicitors can educate the company on the pros and cons of each.

 

Business law solicitors do not usually get involved in the court system, they are a productive countermeasure to ensure businesses do not have to appear in a court trial. There are some initial hearings before the company seeks approval of the business entity. If the company finds itself in a legal situation down the line, they typically bring in a litigator and do not use their business law solicitor. A business law solicitor can either work for the company as an employee or they can come from their own firm. Business law firms usually have a niche of cases they take on such as the intellectual property is their main focus and expertise.  

**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.